Dairy Supply And Factor Demand Response To Output Price Risk: An Econometric Assessment
The model of production decision making for the expected utility maximizing firm under output price uncertainty is applied to a panel Pennsylvania dairy operators. The model generalized duality implemented in this paper has the advantage of generating a system of supply and variable factor demand functions that consistently account for the presence of output price risk. The application to Pennsylvania dairy operators indicates that output price risk measured by the second and third moments of individual operators' historical output price series is not an important factor in production decision making. In addition to not maximizing expected utility, these operators are not expected profit maximizers.
Volume (Year): 18 (1989)
Issue (Month): 2 (October)
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- Gallant, A. Ronald & Jorgenson, Dale W., 1979. "Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 275-302.
- Chavas, Jean-Paul & Pope, Rulon, 1985. "Price uncertainty and competitive firm behavior: Testable hypotheses from expected utility maximization," Journal of Economics and Business, Elsevier, vol. 37(3), pages 223-235, August.
- Jeffrey T. LaFrance & Harry D. Gorter, 1985. "Regulation in a Dynamic Market: The U.S. Dairy Industry," Monash Economics Working Papers archive-34, Monash University, Department of Economics.
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